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  • Obama Promises to Increase Taxes on Small Business, Then Give Them a Tax Credit

    In the midst of President Obama’s push to hike taxes on the most successful job-creating Americans, the President proposed a new “stimulus” of $25 billion to offer tax breaks to businesses for hiring new employees or paying workers higher salaries.

    Sound like déjà vu? That’s because Congress and the Obama Administration passed similar hiring tax credits back in 2010—to no avail.

    Obama’s latest version of the botched policy is intended to target small businesses by offering to refund 10 percent of new payroll costs incurred by companies next year. If enacted, this recycled hiring tax credit will most certainly fail, just as its 2010 predecessor did.

    Just like the original, this remake of an old policy would fail to create long-lasting jobs because it doesn’t affect the core question businesses ask themselves before hiring a new employee: Does the new worker increase the business’s profitability over the long term? Businesses don’t usually hire workers for just one year, so the credit won’t change their decision-making process one bit.

    One other obvious flaw is that Congress would inevitably be giving tax breaks to businesses that had already planned to add new payroll without the new tax credit. At best, a hiring credit might increase temporary workers. But even those jobs would disappear when the credit expires, leaving no lasting effect on the job market.

    Instead of reviving policies that are already proven to fail, the President and Congress should focus on removing uncertainty generated by temporary measures, in order to drive the strong job creation that’s necessary for a robust economy.

    President Obama wants to raise taxes by $1.6 trillion—a huge portion of which would fall on small businesses. Heritage’s Curtis Dubay sums up the damaging effects of imposing high tax rates on businesses and job creators:

    Higher tax rates will take money away from these job creators that they otherwise could have invested to create new jobs. Higher rates will decrease their incentives for taking on new risk, which will also deter job creation.

    It’s ironic that President Obama would hit job creators with higher taxes and then give them a tax credit to hire. Higher tax rates would destroy a much greater number of jobs than his misguided stimulus proposal could possibly create.

    Kaitlyn Evans is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm.

    Posted in Featured [slideshow_deploy]

    9 Responses to Obama Promises to Increase Taxes on Small Business, Then Give Them a Tax Credit

    1. Stirling says:

      More "Obamabucks" at work, while the country has a spending problem.. Obamaclaus spending is not fixing the real problem (but will bring our country to bankruptcy faster)

    2. @pcgeek86 says:

      Why is Obama even still in office? He should have been impeached *years* ago already.

      • Roystoll2 says:

        Because we do not have a single person in Congress with the guts to write the articles of Impeachment.

    3. @sedj4wd says:

      Under the Constitution .. Government can not Borrow money if a War is not been declared * they have to sell Bonds.stock, or Gold .. No war = no Credit No Budget..this is to Protect the Peoples money so Government was not to get to big to Control under the Constitution..As of January 2011, foreigners owned $4.45 trillion of U.S. debt, or approximately 47% of the debt held by the public of $9.49 trillion. Do you want to be owned by Communist Country"s ? If Government can not agree on a Budget then Powers are giving to the States to protect there own ..States no Better how and were they need to be

    4. Erik Osbun says:

      Based upon Obama's past performance, there is no reason to believe him.

    5. O_Henry says:

      Get everything in "hard" assets that you can.

      Prepare to weather a LONG inflationary spiral comparable but larger than the Johnson-Nixon one.

      Why is this happening? Some people will not change without pain…..

      Good Luck

    6. David Kerr says:

      As a CPA, I agree with you! The 10% tax credit is and was a joke. Why would a business spend money on new employees? The ONLY reason is because the economy has strengthened and now the business needs more people. The 10% is just a perk, a prize, for doing something they intended to do all along. No business person in their right mind is going to spend money, without good reason, just to get 10% back. The policy is a "ruse" for the ignorant.

    7. C Sales says:

      I am sorry but I can only predicit doom and gloom for this country. Between a socialist un-American president and a republican party that is purging fellow members from committees because they think freely, and a majority of people who want free things we are doomed. I am so ashamed of what is going on in Washington. We are now having to pay higher taxes due to the incompetence of Washington. What are people thinking of when they vote? We need term limits so people can buy their career in government. Very frustrated!

    8. armymedic1 says:

      It's another sad day in America. Yet another political figure doing the opposite of what their plans were. IE the president. But he was yet again voted back into office. I challenge you to do as I have, ask why the ones who voted for him. See if you get a plausible reason. It's sickening to hear the reasons. Not that the other choice was much better. Because the lesser of two evils is still evil. I pray that someone in particular gets a conscious and start doing what's right for the American people. Doubtful but still a prayer. I fought and was injured for my country, and would have given the ultimate because I still believe and love my country. We should be looking for ways to make it the best place on earth, time consuming but in the end well worth the effort. Stop the insults and negative attitude and work together. Maybe a pipe dream of mine, but certainly helps me make it through the day.

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